Case | HBS Case Collection | September 1991

All American Pipeline

by Timothy A. Luehrman

Abstract

Goodyear is nearing its first major capital commitments for the largest investment project in its history, the All American Pipeline. The pipeline will transport heavy crude oil from California to Texas. It is the centerpiece of a major program by Goodyear to diversify away from its core tire business. Goodyear estimates construction cost at just under $1 billion, while outside observers believe the cost could be twice as high. Students are asked to evaluate the project by analyzing data on the supply and demand for heavy crude oil and the economics of transporting it, and by computing and discounting the cash flows the pipeline can be expected to generate.

Keywords: Capital; Financial Strategy; Business Startups; Diversification; Valuation; Standards; Supply Chain; Resource Allocation; Cash Flow; Mining Industry; California; Texas;

Citation:

Luehrman, Timothy A. "All American Pipeline." Harvard Business School Case 292-040, September 1991.